It seems like USD/CAD ain’t looking back from its climb anytime soon! And with OPEC updating its oil production levels, I’m thinking potential oil price tumbles could mean forex losses for the Loonie.
Price just bounced off the short-term rising trend line on the 1-hour forex chart then showed signs of resuming the rally so I hopped in a small position at market. I’ve decided to set a pretty wide stop for this position trade since a pullback to the area of interest around 1.2750-1.2800 might still be possible.
Aside from that, the PBOC’s decision to devalue the yuan against the dollar is putting upward pressure on the Greenback and downward pressure on commodity currencies at the same time. This would make Chinese imports relatively more expensive and might reduce demand for raw materials and energy-related products. Now that can’t be good for Canada’s oil sector!
Besides, expectations for a September Fed rate hike are still on the table even after the U.S. printed a somewhat disappointing jobs figure for July. Of course market participants will still hold out for the August NFP release before casting their bets on Fed tightening, but I’m inclined to believe that the dollar can stay afloat until then.
For now, I’ve got a small position (0.25%) entered at 1.3135 and I’ve set a stop at 1.2650. I’m still open to entering another long position around the 1.2750-1.2800 area of interest visible on longer-term USD/CAD forex time frames. As for my profit target, I’m thinking “To infinity and beyond!” with this one but I’ve got my sights set on the 1.4000 handle for a swing trade. What do you guys think?
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